Court of Appeal Issues Decision on Vexatious Litigation

The British Columbia Court of Appeal has just released its decision in Extra Gift Exchange Inc. v The Owners, Strata Plan LMS3259, in which the court summarizes and applies the case law on when someone can be declared to be a vexatious litigant.

This issue is important because serious consequences can follow from a judge's decision that someone has repeatedly started frivolous lawsuits. Under s. 18 of the Supreme Court Act, the court can make an order that someone not start a lawsuit in either the Supreme Court or the Provincial Court without permission from the court:

If, on application by any person, the court is satisfied that a person has habitually, persistently and without reasonable grounds, instituted vexatious legal proceedings in the Supreme Court or in the Provincial Court against the same or different persons, the court may, after hearing that person or giving him or her an opportunity to be heard, order that a legal proceeding must not, without leave of the court, be instituted by that person in any court.

Section 29 of the Court of Appeal Act says pretty much the same thing:

If, on the application of any person, a justice is satisfied that a person has habitually, persistently and without reasonable cause commenced vexatious proceedings in the court, the justice may, after hearing that person or giving that person an opportunity to be heard, order that proceedings must not be brought or commenced in the court without leave of a justice.

(Making things even better — or even worse, depending on your perspective — s. 221(1) of the new Family Law Act says that a judge can make an order:

A court may make an order prohibiting a party from making further applications or continuing a proceeding without leave of the court if satisfied that the party

(a) has made an application that is trivial, 

(b) is conducting a proceeding in a manner that is a misuse of the court process, or 

(c) is otherwise acting in a manner that frustrates or misuses the court process.

Under s. 221(2)(c), the judge can also order that the person pay the expenses of another party resulting from this sort of misbehaviour, pay up to $5,000 to someone affected by the person's conduct or pay a fine of up to $5,000.)

Of course it's not at all clear what it means to start "vexatious" lawsuits "habitually," "persistently" and "without reasonable cause." (You can get a sense of some of the confusion on this issue from the comments to my posts "Litigation Conduct may Constitute 'Family Violence' under the Family Law Act" and "Supreme Court Releases Decision on Vexatious Litigants.") And this is why the common law function of the courts is so important: it's their job to decide how many times you have to do something to be "persistent" or "habitual," how much of a dog your case has to be to be brought "without reasonable cause" and how pointlessly irritating your conduct has to be to be "vexatious."

The Court of Appeal was dealing with a real doozy in Extra Gift Exchange, which essentially concerned a series of disputes between someone who'd bought a unit in a mall in Richmond and the strata company responsible for managing the mall and the behaviour of the unit owners. The litigation had gone on for about 13 years before getting to the Court of Appeal on the vexatious litigation issue, and involved 15 different lawsuits, mostly started by Extra Gift Exchange, that had resulted in five appeals. However, the circumstances of the present appeal are less important than the court's discussion of the law, which really boil down to a recapitulation of the Ontario High Court of Justice's 1987 decision in Re Lang Michener et al. v Fabian et al.

The court in Re Lang Michener decided that the following seven factors need to be considered when a judge is deciding whether "a person has persistently and without reasonable grounds ... instituted vexatious proceedings in any court," the test set out in the Ontario legislation (secret decoder ring translation in italics):

"(a) the bringing of one or more actions to determine an issue which has already been determined by a court of competent jurisdiction constitutes a vexatious proceeding;

(Starting a lawsuit about a problem that a court has already decided may be vexatious;)

"(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief, the action is vexatious;

(starting a lawsuit that is obviously doomed to fail may be vexatious;)

"(c) vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;

(starting a lawsuit just to harass someone, not because you have a genuine problem, may be vexatious;)

"(d) it is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;

(recycling the same complaints and problems in lawsuit after lawsuit suggests that the litigation is vexatious;)

"(e) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action;

(the court should look at everything that has gone on in the litigation to date, and not just look at whether the original lawsuit was reasonable, to decide if the litigation is vexatious;)

"(f) the failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious;

(failing to pay court-ordered costs suggests that the litigation is vexatious; and,)

"(g) the respondent's conduct in persistently taking unsuccessful appeals from judicial decisions can be considered vexatious conduct of legal proceedings."

(bringing lots of losing appeals suggests that the litigation is vexatious.)

The court added three points to Re Lang Michener:

• applications to extend time and other procedural applications in appeal proceedings won't usually suggest that the litigation is vexatious; 
• the Court of Appeal can look beyond the appeal and consider a litigant's conduct in the trial court to decided whether the litigation is vexatious; however,
• there must be some misconduct in the Court of Appeal and the frequency of appeals in the Court of Appeal must be vexatious.

Returning to Extra Gift Exchange, the court decided that aspects of how Extra Gift Exchange managed the litigation suggested that the litigation was vexatious (important bits in bold, as always):

"[42] In the Supreme Court, [Extra Gift Exchange] have demonstrated many of the hallmarks of vexatious conduct that were described in [Re Lang Michener]:

· They have demonstrated a propensity to re-argue issues that have been decided against them. 

· They have brought multiple proceedings of dubious merit replete with unsubstantiated allegations of conspiracy and fraud, that could be described as harassment of the applicants. 

· The proceedings seem to roll forward and duplicate proceedings that have already been dismissed or struck. 

· Their pleadings have been described as prolix and unintelligible. 

· There remain outstanding costs orders."

However, despite these seemingly damning conclusions, the held that:

"[44] I cannot conclude that the conduct in this Court, even informed by their conduct below, has yet risen to the level necessary to grant the order sought. My primary reason for saying so is that the frequency of appeals simply cannot be said to be vexatious. I acknowledge that the appeal in this case appears to have little merit and the factum is difficult to understand. But nevertheless, without a stronger pattern of abusive and vexatious conduct in this Court, I am unable to grant the order sought. I have some considerable sympathy for the position of the Strata. They may of course renew this application should [Extra Gift Exchange] conduct themselves in this Court in a vexatious manner. But so far [Extra Gift Exchange's] conduct does not reach that exceptional level that would merit limiting their access to this Court."

Although this decision was sure to disappoint the strata company, the court did note that other remedies were available to it, such as applying for an order that Extra Gift Exchange be require to pay money into court to make sure that funds are set aside to cover any costs order made against Extra Gift Exchange.

Ultimately, Extra Gift Exchange is less than helpful in clarifying readers' questions about how many times you have to do something to be "persistent" or "habitual," how bad your case has to be to be brought "without reasonable cause" and how pointlessly irritating your conduct has to be to be "vexatious." All we know is that the degree of your misbehaviour must be "exceptional," and that you should bear in mind the seven factors described in Re Lang Michener.

However, from a family law perspective, it helps to remember that the language used in s. 221 of the Family Law Act is different from the language of s. 18 of the Supreme Court Act or s. 29 of the Court of Appeal Act. What s. 221(1) talks about is:

• applications that are "trivial;"
• "misuse of the court process;" and, 
• behaving in a manner that otherwise "frustrates or misuses the court process."

None of these three reasons for asking for an order that someone not make further applications or continue a lawsuit use the troublesome language found in the court acts, and it seems to me that Extra Gift Exchange may not apply to applications under s. 221 of the Family Law Act at all. When the legislature uses different language to discuss a similar concept in different laws, it's presumed to having a reason for doing so, and one obvious reason would be to make orders under s. 221 easier to get than orders under the court acts.

I should also say something about the other remedies the court talked about in Extra Gift Exchange. The Family Law Act is full of useful orders that the court can make to modify litigants' behaviour, including these:

• under s. 223(1)(a), the court can dismiss all or part of a lawsuit or an application;
• under s. 223(1)(b)(ii), the court can delay a lawsuit until someone obeys an order;
• under s. 224(1)(a), the court can require parties to attempt to resolve their dispute outside of court; and,
• under s. 227(a), the court can require someone to pay money into court as security for the person's good behaviour.

Although it can be terribly difficult to get an order declaring someone to be a vexatious litigant, as Extra Gift Exchange shows, the Family Law Act provides a number of useful tools that might accomplish something approaching the same result and ought to be easier to obtain.

Alberta Associate Chief Justice Releases Dissertation on Maverick Litigants

Associate Chief Justice Rooke of the Alberta Court of Queen's Bench has just published his decision in Meads v. Meads. This decision is remarkable and should be, I suggest, required reading for judges, lawyers, court administrators and court clerks across the country.

The judgment in Meads is a treatise, a manifesto and a cri de coeur addressing a certain sort of disaffected, maverick litigant which has been clogging up Canada's courts with contrived, pseudolegal arguments and irrational, histrionic demands for a number of years. Mr. Justice Rooke's judgment identifies, analyses and deconstructs the arguments of vexatious litigants variously known as Detaxers, Freemen or Freemen-on-the-Land, Sovereign Men or Sovereign Citizens, members of the Church of the Ecumenical Redemption International and Moorish Law adherents, and makes recommendations as to how the court should manage such litigants.

The common theme among these groups of litigants, who Mr. Justice Rooke collectively refers to as "Organized Pseudolegal Commercial Argument litigants," is that they believe themselves to be privy to some secret legal principles which allow them to evade the normal rules and regulations that bind every other member of civil society. These people — and I have encountered them in my practice — drape themselves in cobbled-together pseudolegal verbiage and concepts, such as describing themselves as "corporate entities" or "juristic persons," claiming copyright over their own names and spelling their names with add-on hyphens and colons (the husband in the case before Mr. Justice Rooke, for example, referred to himself as "::Dennis-Larry:Meads::"), and filing bogus pseudolegal documents festooned with gibberish and meaningless symbols, such as thumbprints, multicoloured ink, pompous phrases set in capital letters, stamps and references to inapplicable, foreign or repealed statutes. Mr. Justice Rooke describes a number of improbable hypotheses common to these litigants, including:

1. that the Canada Revenue Agency has tricked persons into believing there is an obligation to pay tax;
2. that various deficiencies in judicial oaths prohibit court action;
3. that the relationship between the state and a person is a contract which one can opt out of;
4. that legislation, the common-law, and court principles and procedures are trumped by divinely ordained rules and principles;
5. that taxes and civil liabilities only attach to a “corporate name” and not physical persons;
6. that the courts have no power over litigants until they surrender to the courts; 
7. that state actors require the consent of persons, any state activity without consent is oppression; and,
8. that public notaries possess a judge-like authority that displaces the authority of Canadian courts.

After an exhaustive review of the many cases across Canada dealing with these and other favourite arguments, Mr. Justice Rooke concludes that the theories of Organized Pseudolegal Commercial Argument litigants have never gained purchase in a Canadian court.

Mr. Justice Rooke goes on to point out certain common linguistic, documentary, analytic and behavioural hallmarks of these litigants, and suggests a number of procedural devices that can be employed by the courts to manage and curb their excesses.

Court Staff:

1. Reject documents and materials that do not conform to established standards.
2. Mark non-compliant materials as "received" rather than "filed."
3. Forward potentially non-compliant materials to a judicial officer for review before filing.

The Judiciary:

1. Strike actions, applications and defences that are frivolous or vexatious.
2. Award punitive damages where the litigant's conduct is high-handed, abusive or oppressive.
3. Award elevated costs in favour of opposing parties to off-set their increases legal expenses resulting from the litigant's conduct.
4. Make orders that the litigant post security for costs at an early stage of the litigation.
5. Adopt tight approach to case management and assign a single judge to manage the case through to trial.
6. Consider whether the character and nature of the litigation warrants a finding that the litigant is frivolous and vexatious and should be barred from commencing further proceedings without leave.
7. Restrict who may appear as a representative or agent of the litigant.

It isn't particularly difficult to extrapolate from these comments principles of use to lawyers and self-represented parties dealing with such litigants. May I suggest:

Lawyers:

1. Apply to the chief justice for an order appointing a case management judge early on.
2. Consider whether the litigant's claim or defence discloses a legitimate cause of action or defence and apply to strike if it does not.
3. Do not waste your client's money replying to nonsensical pleading or applications in the same voluminous manner as the litigant's material, consider applying for directions.
4. Consider applying for security for costs, bearing in mind the generally high threshold that must be reached before such orders will be made. Search for other reported cases involving the same litigant.
5. Carefully scrutinize the background and motivations of persons seeking approval to appear as a representative or agent, and object where the person is going to exacerbate the situation.

Finally, the concluding remarks of Mr. Justice Rooke deserve repetition:

[71] Dealing with an OPCA litigant is difficult and frustrating. The fact that they are almost always self-represented adds to the challenge. What is worse is if a [OPCA proselytizer] is directly involved. I anticipate most judges will not tolerate representation by these persons ... particularly if the judge understands the nature of the [proselytizer] and his activities. ... 

[72] Timely and cost-effective resolution of these disputes requires that an action be pared down to its legitimate substance. That can be achieved by applications to strike irrelevant submissions and pleadings, and to categorize materials as irrelevant except for the purpose of costs, vexatious litigation and litigant status, and contempt and criminal sanction.

Supreme Court Releases Decision on Vexatious Litigants

The Supreme Court has helpfully summarized the law on vexatious litigants in a new case, Vancouver City Savings Credit Union v. Randhawa.

In a nutshell, this issue has to do with the court's authority to control its own process and the parties before it. It can happen, but doesn't with great frequency, that a person will use the court system to initiate frivolous actions and applications seeking impossible orders without a real foundation in law. Sometimes these are the people whose make claims that the RCMP is attempting to control their thoughts through their toaster, and in the course of their claim against the RCMP also sue the Attorney General, Premier, Prime Minister and Queen for good measure. At other times, these are the people who have a legitimate grievance but lack the judgment to distinguish between the trivial and the substantive. Both sorts of litigant tend to appeal the judgments they don't like and appeal lost appeals, and their litigation gets stuck in an endless cycle of losing applications and losing appeals; these litigants lack the ability to understand that when the court says "enough," the court really means enough.

Section 18 of the Supreme Court Act provides an instructive gloss on the court's inherent jurisdiction to control its own processes and says the following, under the heading Vexatious Proceedings:

"If, on an application by any person, the court is satisfied that a person has habitually, persistently and without reasonable grounds, instituted vexatious legal proceedings in the Supreme Court or in the Provincial Court against the same or different persons, the court may, after hearing that person or giving him or her an opportunity to be heard, order that a legal proceeding must not, without leave of the court, be instituted by that person in any court."

In other words, the court can require that a litigant not start an action, or bring an application in an action, without getting permission first.

For people stuck in endless meretricious litigation this can be a boon! Normally, you see, a litigant has the right to sue whomever he or she wishes, and, once the action is commenced, the right to apply for whatever orders strike his or her fancy whenever the moon is in the right phase. Normally, however, people exercise good judgment and are somewhat restrained by cost to bring only those actions and applications which are in fact meritorious.

In the Vancouver City Savings case, the credit union applied for a s. 18 order that the respondents:

"... be prohibited from initiating any legal proceedings, including but not limited to interlocutory applications, against VanCity, or any of its officers, agents or employees without leave of the court."

The judge began his analysis quoting from the 2010 Supreme Court decision in Holland v. Marshall (I've put the key elements in bold):

"[7] To succeed on an application pursuant to s. 18, the applicant must demonstrate:

1. that the proceedings are vexatious in the sense of having been taken in the absence of objectively reasonable ground; and

2. that proceedings have been brought habitually or persistently, such that the litigant has continued obstinately in the course of conduct, despite protests or criticism. (British Columbia) Public Guardian and Trustee v. Brown, 2002 BCSC 1152.

"[8] In Lang Michener v. Fabian ... the Ontario High Court described the characteristics of a typical vexatious proceeding:

(a) bringing one or more actions to decide an issue which has already been determined by a court of competent jurisdiction;

(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief;

(c) actions brought for an improper purpose, including the harassment or oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;

(d) grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;

(e) failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings;

(f) persistently taking unsuccessful appeals from judicial decisions; and

(g) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action."

After a relatively succinct review of the lengthy history of proceedings, the judge said this:

"It is as apparent to me ... that the respondents have persisted in bringing 'a raft of doomed applications'. They have done so in the face of clear judicial pronouncements, directions or advice explaining the lack of jurisdiction of this court to set aside final orders or to revisit issues that have already been decided. ...

"It is apparent to me that in the face of the judicial criticism, advice and direction the respondents will simply continue to bring applications in this proceeding which have no objective or reasonable basis. They are acting habitually and persistently in the face of judicial direction and criticism."

As you might expect from concluding comments like these, the credit union obtained the order sought.